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The Boring Portfolio

ALEXANDRIA, VA, November 26, 1996 -- And now for the most Boring Port re-cap
of all time: Nothing of real substance happened today that would force out
a long-term investor from these positions. As such, I wish you all a Foolish
and Boring Goodnight.

OK, so I'm a hambone. I can't take advantage of the Boring concept to the
degree where I can slide by with a quick "nothing happened today." I do believe,
however, that such an attitude is the best way to deal with the day-to-day
movements in a personal portfolio. I mean, yeah, the Port was down two
one-hundredths of a percent today. So what's to worry about? Market crashes?
Credit quality meltdowns? The Masons exerting too much influence on decision
making in our democracy? Wow, sorry. The absolute non-event of the change
in the portfolio led my mind to wander -- I was thinking about Jacksonian-era
problems, when East Coast bigwigs of every political stripe or foreign investors
controlled many corporations. The average person's retirement policy consisted
of producing as many kids as possible to work the farm.

In this day and age, however, anyone can invest effectively without fear
that their investment is being controlled or manipulated by some sharpy.
How does one goes about effecting this disestablishmentarianist change? Harness
the power of collaborative analysis found on the Motley Fool message boards;
review the quarterly conference call synopses; check in on the conference
call recordings that more and more corporations are providing to investors;
and learn how to pull all that together by valuing a company. Finally, having
accomplished those, buy great companies at values where you could genuinely
say, "I would buy this whole company if I had the resources."

I happen to think that Boring has bought some great companies, and
notwithstanding my indifference to one-day returns of an individual portfolio,
let's check in on some of the news items generated by the companies that
Greg owns.

Prime Medical expanded their investments in two South Carolina lithotripsy
partnerships with which they have had long involvements. In both of these
deals, though, the company maintains a shared interest with the doctors who
actually perform these procedures. Along with another boring company I know,
Columbia/HCA (NYSE: COL), this has proven to be a great business plan. The
doctors work harder to see to it that the patient has received the best care
possible, the patient comes away feeling like they've received the best
treatment, the patient says good things about the care and recommends it
to others, and the shareholders (among them, Boring and the doctor) do well.
Works for me. Judging by the five-year performance of Prime Medical, during
which time the stock has returned about 50% per year, my assessment is validated.
The shareholders have done extremely well, but that can't happen without
the customers -- the patients -- having done well.

Elsewhere on this most Boring of days in this most Boring of portfolios,
Cisco announced enhanced software support for IBM's (NYSE: IBM) mainframe
networks. Though I don't have the ability to bore you to death with a
comprehensive discussion of the multiprotocol/SNA network control software,
I can boil down the press release to the following explanation: Cisco is
making it easier and cheaper for IBM mainframe network managers to troubleshoot
problems and fix them. Hey, maybe Cisco needs a copywriter. The software
is the name of the game with Cisco, too. It's not the boxes and it's not
magic -- it's about a company that provides solutions and support to customers.

Detect a theme here? I share Boring's outlook on selecting companies -- the
goal is to find companies that are excellent at what they do, and have the
business models, finances, and managements to become the classes of their
industries and the economy at large.

In other Port news, Solectron completed its acquisition of Force Computer.
Looking at the valuation Solectron put on this company, one could guess that
Force's revenues are somewhere around $200-400 million. As Solectron manages
their operating margins better than almost anyone else in this industry,
one would expect that they can pull off at least a $0.25 per share in earnings
accretion from Force's operations. Given their description as an embedded
systems company, I assume that Force is a higher-margin operation than Solectron.
An additional $0.25 in EPS equates to a more than 10 percent increase over
current trailing earnings of about $2.28. On a share expansion of only about
7% (the 3.5 million shares issued in the merger, as mentioned in the press
release) the company's done a nice job if they can expand per share earnings
10% or more.

Speaking of share counts, Borders Group announced that it will buy back up
to $50 million in stock to offset dilution associated with employee options
exercises. Cool. Reward the employees and keep the shareholders whole. On
top of that, they run a great retail operation. What more can one ask for?

That's about it for the Borefolio tonight. I didn't see anything else that
happened, except that I noticed a neat happening outside of the Port today.
Oneida Ltd. (NYSE: OCQ), which is located right down the road from Port holding
Carlisle Companies, decided that they would focus on their boring old flatware
and china business. They also paid their 244th straight quarterly dividend.
Boring enough to look into? I think I will be.